Washington coal plant produces no power but plenty of costs. Who pays?

This story was originally published by Washington State Standard.

Electric utilities across the Pacific Northwest are fuming that their customers might be saddled with the costs of a coal-burning power plant that isn’t producing any power.

The messy dispute stems from the Trump administration’s ongoing efforts to sustain the American coal industry.

The owner of the coal plant near Centralia, Washington, said it is complying with a federal order to keep the facility open — although it appears to have burned its last lump of coal back in December. Now, TransAlta, is seeking tens of millions of dollars in reimbursement for costs incurred to keep the workforce and the 55-year-old power plant available to operate.

The company’s CEO said TransAlta is also still committed to a plan to retrofit the big plant to burn natural gas in the future.

In December, TransAlta’s long-standing plan to retire the only remaining coal-fired power plant in the Northwest was blocked by an emergency 90-day order from Energy Secretary Chris Wright, who deemed the plant vital to regional energy security. Wright has since renewed his order twice, most recently in mid-June.

The Federal Energy Regulatory Commission is now weighing TransAlta’s reimbursement request against briefs in opposition filed by numerous Western utility associations and regional electric grid managers. Environmental groups and the Washington state attorney general also joined the fray.

“If this coal plant is supposedly essential to keeping the lights on, then why has it been sitting idle while families and businesses pay the enormous costs of keeping it online?” Ted Kelly of the Environmental Defense Fund said in a press release. ​“These coal mandates are increasingly being exposed for what they are: wasteful charades that leave families and businesses holding the bag.”

The first invoice for cost recovery that TransAlta submitted for federal review on April 30 was for nearly $20 million. At that time, the company warned it was incurring ongoing costs to keep the Centralia power plant open and would seek more reimbursement later.

Further, TransAlta estimated it would need $23 million to repair and refurbish the aging coal-burning power plant to keep it in safe operating condition if ordered to remain on standby into the third and fourth quarters of 2026. As it happens, the latest extension of the Department of Energy’s emergency order runs through Sept. 13.

The state of Washington and allied environmental groups contend there is no emergency and have challenged the Department of Energy orders as illegal. The Energy Department counters that the Northwest would be unnecessarily at risk of blackouts without coal generation.

“During peak summer demand, Northwesterners deserve continued access to affordable, reliable, and secure energy to power and cool their homes,” Energy Secretary Wright said in a mid-June statement.

Who should pay?

TransAlta is an independent power producer that no longer has any customers in the Northwest.

The Alberta-based company proposed to split the tab for the first 90-day order between the two entities given dispatch authority initially for the plant’s potential coal power. Those were the Portland-based Bonneville Power Administration and the California Independent System Operator, the manager of California’s wholesale electric grid.

The second and third emergency orders named two new players that TransAlta proposes to put on the hook: the Southwest Power Pool, headquartered in Arkansas, and GridForce, a small firm that runs the data platform for balancing supply and demand on the Northwest power grid.

All four entities rejected TransAlta’s proposed invoicing. They argued it was ​“unjust and unreasonable” to be billed for coal power that they did not request nor receive.

“Nothing under the facts or plain meaning of the DOE orders would make Bonneville a customer of TransAlta, or otherwise make Bonneville responsible for costs associated with the availability or dispatch of (the Centralia power plant),” wrote BPA attorney Matthew Perkins in an opposition brief submitted to the regulatory commission.

The Bonneville Power Administration has not explicitly stated whether it would pass on TransAlta costs to its own customers. BPA serves wholesale power to more than 130 utilities spanning Oregon, Washington, Idaho, and western Montana.

Those customer utilities are alarmed.

“It would be wholly inappropriate to allow even a penny of cost recovery from Bonneville,” wrote a trio of attorneys representing rural electric cooperatives, the Portland-based Public Power Council, and the Snohomish County Public Utility District, in a protest filed with FERC on Monday.

GridForce said it could be forced out of business if stuck with a share of TransAlta’s tab. The Texas-based data provider asked FERC to be removed from responsibility because it had no say in the decision-making for Centralia operations.

The Federal Energy Regulatory Commission will likely assign an administrative law judge to review the TransAlta cost recovery case and then send a recommended judgment to the five-member commission for a final decision. The five commissioners are political appointees, three Republicans and two Democrats. A FERC spokesperson this week declined to offer any guidance on the timeline for adjudication of the case.

TransAlta walks a fine line

Throughout all this, TransAlta has taken pains to avoid criticizing or antagonizing the Trump administration. During an earnings call with Canadian stock analysts last month, CEO Joel Hunter repeatedly stressed that his company was complying with the Department of Energy order to keep the Centralia coal plant available to operate.

But Hunter also let on that he did not expect Centralia to restart using coal because the price would be deeply uncompetitive.

“It hasn’t run thus far and our expectation is that it likely will not run here, you know, through (the duration of) the order,” Hunter said. 

The company’s cost recovery filing to FERC elaborated on how the economics of coal-fired generation have become unfavorable in Washington state.

The Democrat-controlled Legislature voted to apply the state’s hefty sales tax to coal deliveries as of this spring. The same legislation also decreed that TransAlta would have to purchase climate pollution allowances at the state’s periodic cap-and-trade auctions if it resumes burning coal. The cost of those emissions fees would be very high, given that coal has a much larger carbon footprint than the alternatives.

Any power produced from coal in Centralia would have to be sold out-of-state because Washington electric utilities cannot purchase coal-derived power due to a clean energy transition requirement that took effect in January.

Hunter said TransAlta wants to proceed with its previously announced plan to convert the hulking 730-megawatt Centralia coal power plant to run on natural gas in a few years.

“Progress continues with the conversion, and I’m pleased to report that our timeline for a final investment decision in the first quarter of 2027 remains on schedule,“ Hunter told the Canadian stock analysts. ​“We are doing the front-end engineering and design work right now at the facility.”

In a separate federal court case, the Washington attorney general and environmental groups are asking a judge to negate the Energy Department’s emergency orders keeping the Centralia coal plant alive. That case is on a slow track at the 9th U.S. Circuit Court of Appeals.

TranAlta’s Centralia operation is one of at least six coal-burning power plants around the nation that the Trump administration is trying to keep open past their planned retirement dates.